Fintech & Ecommerce

Robinhood Reaches $10.2 Million Settlement on March 2020 Platform Outage

The American financial company Robinhood has reached an agreement with state securities regulators regarding the settlement of a situation related to operational and technical failures.

Robinhood Reaches $10.2 Million Settlement on March 2020 Platform Outage

Source: motionarray.com

The North American Association of Securities Administrators (NASAA) on Thursday, April 6, published a press release stating that the settlement in the amount of $ 10.6 million concerns interruptions in the operation of the company platform in March 2020 and operational deficiencies that were observed until March 2021. Due to these violations of the functioning of the platform designed for investing and trading stocks, they lost the ability to process transactions.

NASAA President Andrew Hartnett says that the company should follow a responsible approach to customer service and correct shortcomings related to this process.

The investigation, which was conducted by state securities regulators in Alabama, California, Colorado, Delaware, New Jersey, South Dakota, and Texas, testified that until March 2021 Robinhood allowed various shortcomings in the process of reviewing and approving options and margin accounts, in monitoring and reporting tools, in customer service and escalation protocols.

The press release states that the company does not comment on the conclusions that regulators have not found evidence that the failures are not intentional and do not contain signs of fraudulent actions. It is also noted that the firm cooperated with the investigation.

Lukas Moskowitz, Deputy General Counsel of Robinhood Markets and head of government relations said that the company is resolving this issue and leaving it in the past. He also noted that the firm spent significant funds to solve the problem, including launching round-the-clock chat and telephone support, strengthening control over technology, and expanding the library of educational materials.

Lukas Moskowitz said that the company continues to remove obstacles on the way to markets for those who previously did not have the appropriate access.

As part of the settlement, Robinhood will provide access to the FINRA compliance report and, one year after receiving data on the resolution of the issue, will confirm that all aspects of its activities comply with the recommendations of an independent compliance consultant.

In March 2020, the company’s platform functioned with failures. Because of this, stock and options, traders could not fully carry out their activities. Some messages from the company’s support service by e-mail were problematic to deliver to customers even after the platform was restored.

As we have reported earlier, U.S. Government Seizes SBF’s $465 Million in Robinhood Shares.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.